Perestroika's promise is clouded by untimely mistakes, shortfalls

ByDAVID R. FRANCISFebruary 22, 1988

IF Soviet Communist Party chief Mikhail Gorbachev faced primary elections as American presidential candidates do, Washington economist Jan Vanous would be supplying ammunition for his opponents. Mr. Vanous has been looking at Mr. Gorbachev's perestroika (restructuring) program and finds it in ``serious trouble.''

Mr. Vanous, a Czech-born economist, certainly recognizes, as does Mr. Gorbachev, the need for the Soviet Union to build a modern, competitive economy.

He believes, however, that the Soviet leader has made some key strategic mistakes that not only have resulted in a discouraging economic performance for the Soviet Union last year but have also put his program in peril.

A broader measure, gross domestic product, showed a deceleration from 4.5 percent in 1986 to 3.3 percent in real terms in 1987.

This news, Vanous warns, will undoubtedly be exploited by Gorbachev's conservative opponents, noting that this was the second worst Soviet growth performance since World War II.

``Mr. Gorbachev's only hope is that he can talk some sense into the majority of his colleagues at the top and argue that poor economic performance last year makes it all the more urgent to fully implement all aspects of his perestroika program,'' writes Vanous in his consulting firm's weekly PlanEcon Report deal-ing with Soviet and Eastern European economic affairs.

If Gorbachev has his way at a special party conference in June, he will win support for further economic reforms.

Where did perestroika go astray?

Vanous believes the fatal flaw was its failure, under pressure from such conservatives as Yegor Ligachev, a Central Committee member and chief party ideologist, to put reform in agriculture on the front burner rather than consigning it to the back burner.

In contrast, the Chinese government did give farm reform top priority, offering China's multitudinous peasants incentives to work harder and earn more. The result has been several years of economic growth at rates higher than 5 percent.

The advantage of agricultural reform is that it produces quick results, Vanous notes. Given financial encouragement and the means, farmers can have a better supply of vegetables on the store shelves within 18 months. More pork could be available in two years. Farmers will see to it that more fruit is picked and delivered safely as soon as the next crop comes along.

``Ordinary Soviet citizens will enthusiastically embrace any Soviet politician(s) who will give them an opportunity to buy more, even at higher prices,'' says Vanous.

As it is, Soviet personal incomes are rising, but an estimated 73 percent of that increase has been saved, because there are not enough goods that people want to buy.

Vanous believes the Soviet leadership should have allowed a sharp increase in imports of consumer goods from the West and the third world. These goods could have been priced several times higher than their Soviet counterparts to soak up the extra purchasing power. Some of that excess money, by the way, has resulted from the sharp decline in the output of liquor as a conscious government policy to reduce its harm on workers and the economy.

Another flaw in perestroika, says Vanous, is that Soviet industry has not shifted more of its investment from new plant and structures toward modern machinery and equipment - a shift that would produce faster modernization. Nor has it boosted technological imports from the West, partly because of chauvinistic attitudes about Soviet technology rather than a shortage of finances.

Gorbachev may not have to curry the favor of voters in free elections. But he will face his party colleagues with what Vanous terms ``the worst political mistake of his career'' - a neglect of Soviet consumers.